Tax Return Problem
Prepare a U. S. Individual Income Tax Return for 2014 based on the information below. You may use a tax preparation program such as TurboTax to prepare the sample return. You may also do the return by hand as long as you use official IRS forms. I prefer that your solution be in pdf. Sign the return as paid preparer and include all information a paid preparer must include. You may use your student number as though it were your PTIN.
The taxpayers are a married couple. They want to file a joint return for 2014.
Names and Social Security Numbers: John W. Stanfill (431-97-1234) and Mary E. Stanfill (432-68-9871)
John is employed as a manager. Mary is a legal assistant. Neither is covered by a qualified pension plan where they work.
Address: 618 Smart Road, Troy, Alabama 36079
Dependents: Son: Samuel A. Stanfill (431-98-5243) and Daughter: Rebekah A. Stanfill (432-26-7945)
Age in years at end of 2014:
They do NOT want any of their tax to go to the presidential election fund.
They had the following federal income tax withheld in 2014:
In addition, they applied a refund they otherwise could have received in cash for their 2013 return to their 2014 return in the amount of $1,650.
Salary for John $52,000
Salary for Mary $33,000
Unemployment compensation received by Mary $3,000
Qualified dividends received from AT&T $1,600
Interest on bank accounts received from Wells Fargo Bank $2,000
Interest on City of Troy, Alabama, bonds $2,500
State of Alabama income tax refund received in 2014 for overpayment of 2013 taxes $800
(They itemized their deductions on Schedule A for 2013. Their total itemized deductions exceeded the standard deduction to which they would have otherwise been entitled by $675)
John won $2,500 playing video poker at Grand Casino in Las Vegas, Nevada
John and Mary own one rent house. An agent manages it for them. They had the following income and expenses relative to the rent house:
Rent Income $11,800
Tenant forfeited a deposit for moving out before the end of the lease $1,000
Management fee $1,188
Real estate taxes $560
Property insurance $960
Mortgage interest $7,546
Depreciation: you calculate it based on the following information:
Cost of rent house (single family residence): $120,000 of which $25,000 was allocated to the land and $95,000 to the house itself). They own it as tenants by the entirety. The physical address of the house is 206 Sussex Avenue, Troy, Alabama 36081. The property was rented for 356 days during 2014. It was available for rent the other nine days of 2014. John and Mary did not use their rent house for personal use at any time during 2014.
Date of purchase: July 1, 2009
John and Mary have used the house as rental property from the date they purchased it to the present.
Tax preparation fee (see below)
Possible Other Deductions:
John lost $500 playing video poker at Hard Rock Casino in Biloxi, Mississippi
Real estate taxes on their primary home $700
Mortgage interest on their primary home $9,845
Cash donations to United Way $200
Cash donations to First Community Church $1,200
Alabama state income tax withheld during 2014:
Tax preparation fee paid in 2014 for the preparation of their 2013 return: Total fee $600 of which $200 was related to the part of the return for their rent house and $400 for the rest of the return
John paid $4,800 in alimony to his former wife now known as Susan N. Cash (430-01-6587)
They paid a penalty to Wells Fargo Bank on an early cancellation of a certificate of deposit $250
Contribution to a traditional IRA: John $3,600
Contribution to a Roth IRA: Mary $2,400
They want a cash refund if they are due one. They want to pay as little tax as possible. So, if you find any other tax benefits to which they are entitled, please claim them.